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Habits

With the start of the NFL season this week, I thought it was a good time to bring up the issue of sports gambling. There are various ways that people bet on sports nowadays. The most common are on individual games and fantasy sports. Not only is betting on sports illegal in the US, but it can also have a negative impact on your finances.

Individual Games

The NFL Super Bowl is the most popular game to bet on each year. Fox Business estimated in January that Super Bowl 51 drew $4.7 billion in total wagers. NBA March Madness is another popular event to gamble on every year. Last year there was a total of $10.4 billion wagered through March Madness brackets. Finally, the International Business Times estimated in 2015 that $95 billion was gambled on NFL and college football games throughout the season.

These are just some examples of sports betting and the numbers are staggering. They show that a lot of people are spending big money on individual games. There are also some states like Nevada that have legal sports gambling. No wonder that so many people don’t even have $1,000 in a savings account!

Fantasy Sports

Fantasy Sports is one of the biggest forms of gambling in the USA and Canada. The Fantasy Sports Trade Association (FSTA) regularly publishes data and demographics about fantasy sports.

Here are their numbers at a glance:

66% Male // 34% Female

Average Age: 38.6

College Degree or More: 66%

Have a household income of $75k+: 51%

Have full-time employment: 67%

Average Annual Spending Per Fantasy Player (age 18+): $556

Favorite Fantasy Sport: Football

Fantasy Sports Players that Pay League Fee: 70%

The FSTA also finds that the percentage of the population playing fantasy sports is 21% in the USA and 19% in Canada.

In 2017 there are projected to be 59.3 million players in the USA and Canada.

The $556 annually consists of $318 from Daily Fantasy Sports, $184 from Traditional Fantasy Sports, and $54 from materials. While this doesn’t sound like much money, if you were to invest $556 each year in an S&P 500 Index Fund at a 7% annual rate of return, you would have over $516,000 after 60 years.

Bottom Line

There are a large number of people spending thousands of dollars on sports gambling every year. This is another habit that will negatively impact your net worth. Despite what you might think and no matter how passionate you are about sports, the odds of winning are not in your favor. Consider using this money to invest or to pay down debt including student loans, credit cards, and mortgages. This is extra money that you will have available to spend on actually going to a game. Don’t gamble away your Sundays when you could be enjoying the game-day experience instead.

Habits Habits Everywhere

Everybody has habits that are impacting their future net worth. It is not possible to eliminate all of these habits but if we seek to minimize them we can end up with maximum cents! There are an infinite number of habits that people have. I am going to explore some typical habits to see the yearly impact.

Cigarettes

For this example I’m going to assume someone smokes 1 pack of cigarettes a day at a cost of $10 per pack. This comes to $3,600 up in smoke per year. Everyone knows that smoking will also lead to health issues down the road, but for today I’m going to ignore those costs.

Drinking

Nothing like enjoying some cold beer with friends after a hard week at work! I’m going to assume that someone goes to a bar once a week and orders 4 drinks at $7 per beer. That’s $1,456 down the hatch each year.

Coffee

Here is one of my guilty pleasures. I believe in the motto: “Life is short, Drink good coffee.” Let’s assume that someone goes to their coffee store of choice twice per day to get a medium designer latte at $3.65 per cup. Each year their java habit comes to $2,665.

Restaurants

According to NY Magazine, as of 2016, Americans were spending more at restaurants than on groceries for the first time in recorded history. We will assume their average of $9 per meal is correct and this hypothetical person will eat half of their meals per week from a restaurant. Surprisingly this is the most expensive habit and comes out to $4,914 per year. Again, I am ignoring the secondary effects of eating unhealthy meals from restaurants.

Yearly Impact of These Habits

Time to add up all the habits from this person and see what it totals per year:

Habit

Cost Per Year

Cigarettes

$3,600

Drinking

$1,456

Coffee

$2,665

Restaurants

$4,914

Total Per Year

$12,635

The result of $12,635 is surprisingly high! I feel that the numbers I used in the examples were being conservative by using the averages for the various habits. I could easily see a large number of people spending more than this number per year if they have more expensive tastes.

This is a lot of money to be spending unless you are making high six figures or above. Somebody making the mean income of about $50,000 will pay taxes of $8,238 (assuming no deductions or state taxes). After spending the average $18,000 per year on housing, this leaves $23,762 per year. After the habits are factored in it leaves you with $11,127 per year.

Summary

This is not a lot of money left over. I have not covered several expenses that people typically incur including insurance, cars, child care, clothing, travel, gifts, entertainment, etc. Reducing the cost of these habits is crucial in order to have any savings left over and to ultimately invest.

In future posts I will write about steps to minimize the financial effects of these habits. I will also look into the impact they have on future net worth.